Finance minister says Russia could default

Portugal’s minister of Finance, João Leão has warned that Russia could default on its loans by effectively paying the interest on loans in roubles.

As he left a meeting of the Euro Zone’s finance ministers ECOFIN on Tuesday, João Leão told journalists “Russia could default in the coming weeks because it doesn’t have the means to pay its public debt as its economy has shrunk by an estimated 30%, interest rates have soared by 20% and half of its nearly US$700Bn reserves have been frozen.
Leão admitted that the crisis could have some impact on some European funds but has ruled out a significant effect on the European Union’s financial system.
“If we need to, we can step up sanctions and maximise their impact on the Russian Federation”.
On Tuesday, the Council of Europe arrived at an agreement to implement a fourth package of sanctions on Russia which included targeting the multimillionaire oligarch and Chelsea Football Club owner Roman Abramovich who has a Portuguese passport.
Moreover, the Finance minster warned that the war would push up inflation rates above the expected +1.3% in Portugal seen in 2021. However, he did not give a specific forecast for growth in the Portuguese economy. The current EU average inflation rate for February was 5.8%.
The Government’s last official forecast for GDP growth was for 5.5% this year, but this forecast is likely to now be lower. EU statistics show that Portugal’s inflation rate currently stands at 4.2%.